UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended March 31, ~~2018~~2019



¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to .

Commission file number 1-31234

WESTWOOD HOLDINGS GROUP, INC.

(Exact name of registrant as specified in its charter)



DELAWARE		75-2969997
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

200 CRESCENT COURT, SUITE 1200 DALLAS, TEXAS		75201
(Address of principal executive office)		(Zip Code)

(214) 756-6900

(Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files).

Yes x No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated ~~filer”,~~filer,” “accelerated ~~filer” and~~filer,” “smaller reporting ~~company”,~~company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	¨	Accelerated filer	x

Non-accelerated filer	¨ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	¨

		Emerging growth company	¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised accounting standards provided pursuant to Section 13(a) of the Exchange Act.			¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ¨ No x

Shares of common stock, par value $0.01 per share, outstanding as of April ~~20, 2018: 9,016,436.~~19, 2019: 8,971,173.

WESTWOOD HOLDINGS GROUP, INC.

INDEX



PART I	FINANCIAL INFORMATION	PAGE

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets as of March 31, ~~2018~~2019 and December 31, ~~2017~~2018	1

	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	2

	Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2019 and 2018	3

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, ~~2018~~2019 and ~~2017~~2018	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27

Item 4.	Controls and Procedures	27

PART II	OTHER INFORMATION	28

Item 1.	Legal Proceedings	28

Item 1A.	Risk Factors	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	28

Item 6.	Exhibits	29

Signatures		30

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value and share amounts)

(Unaudited)


	March 31, 2018			December 31, 2017			March 31, 2019			December 31, 2018

ASSETS
Current assets:
Cash and cash equivalents	$	51,550		$	54,249		$	52,421		$	52,449
Accounts receivable	23,945			21,660			15,563			18,429
Investments, at fair value	48,917			51,324			49,601			65,781
Prepaid income taxes	1,752			4,269			864			349
Other current assets	3,465			6,612			3,622			2,731
Total current assets	129,629			138,114			122,071			139,739
Investments (including investments at fair value of $250 and $0)							5,675			5,425
Goodwill	19,804			27,144			19,804			19,804
Deferred income taxes	4,247			3,407			4,838			5,102
Operating lease right-of-use assets							8,472			8,698
Intangible assets, net	17,216			19,804			15,549			15,961
Property and equipment, net of accumulated depreciation of $5,848 and $5,673	4,220			4,190
Property and equipment, net of accumulated depreciation of $6,689 and $6,462							4,740			4,454
Total assets	$	175,116		$	192,659		$	181,149		$	199,183
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	3,192		$	3,501		$	2,672		$	2,518
Dividends payable	6,980			7,357			7,232			7,710
Compensation and benefits payable	5,164			19,075			2,646			15,102
Operating lease liabilities							1,538			1,432
Income taxes payable	977			1,598			1,254			365
Total current liabilities	16,313			31,531			15,342			27,127
Accrued dividends	856			1,717			748			1,576
Noncurrent income taxes payable	—			1,017
Deferred rent	1,927			1,998
Noncurrent operating lease liabilities							8,949			9,331
Total liabilities	19,096			36,263			25,039			38,034
Commitments and contingencies (Note 13)
Stockholders' Equity:
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 10,195,216 and outstanding 9,017,274 shares at March 31, 2018; issued 9,980,827 and outstanding 8,899,587 shares at December 31, 2017	102			100
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 10,340,629 and outstanding 8,975,865 shares at March 31, 2019; issued 10,182,583 and outstanding 8,904,902 shares at December 31, 2018							104			102
Additional paid-in capital	183,591			179,241			197,598			194,116
Treasury stock, at cost - 1,177,942 shares at March 31, 2018; 1,081,240 shares at December 31, 2017	(55,201		)	(49,788		)
Treasury stock, at cost - 1,364,764 shares at March 31, 2019; 1,277,681 shares at December 31, 2018							(62,077		)	(58,711		)
Accumulated other comprehensive loss	(2,963		)	(1,764		)	(4,052		)	(4,883		)
Retained earnings	30,491			28,607			24,537			30,525
Total stockholders' equity	156,020			156,396			156,110			161,149
Total liabilities and stockholders' equity	$	175,116		$	192,659		$	181,149		$	199,183

See Notes to Condensed Consolidated Financial Statements.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data and share amounts)

(Unaudited)


	Three Months Ended March 31,					Three Months Ended March 31,
	2018			2017		2019		2018
REVENUES:
Advisory fees:
Asset-based	$	24,483		$	23,789	$	16,406	$	24,483
Performance-based	1,335			386		180		1,335
Trust fees	7,609			7,795		6,539		7,609
Other, net	140			653		737		140
Total revenues	33,567			32,623		23,862		33,567
EXPENSES:
Employee compensation and benefits	17,759			17,717		14,610		17,759
Sales and marketing	443			477		530		443
Westwood mutual funds	985			863		846		985
Information technology	2,038			1,756		1,977		2,038
Professional services	1,028			1,496		1,149		1,028
General and administrative	1,351			2,544		2,434		2,414
(Gain) loss on foreign currency transactions						820		(1,063		)
Total expenses	23,604			24,853		22,366		23,604
Net operating income	9,963			7,770		1,496		9,963
Gain on sale of operations	524			—		—		524
Income before income taxes	10,487			7,770		1,496		10,487
Provision for income taxes	2,509			1,706		1,104		2,509
Net income	$	7,978		$	6,064	$	392	$	7,978
Other comprehensive income (loss):
Foreign currency translation adjustments	(1,199		)	207		831		(1,199		)
Total comprehensive income	$	6,779		$	6,271	$	1,223	$	6,779

Earnings per share:
Basic	$	0.96		$	0.75	$	0.05	$	0.96
Diluted	$	0.93		$	0.73	$	0.05	$	0.93
Weighted average shares outstanding:
Basic	8,270,793			8,065,825		8,363,109		8,270,793
Diluted	8,539,545			8,311,382		8,455,386		8,539,545

Cash dividends declared per share	$	0.68		$	0.62

See Notes to Condensed Consolidated Financial Statements.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2019 and 2018

(In thousands, except share amounts)

(Unaudited)


	Common Stock, Par				Additional Paid-In Capital				Treasury Stock				Accumulated Other Comprehensive Loss				Retained Earnings			Total				Common Stock, Par				Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Gain (Loss)			Retained Earnings			Total
	Shares		Amount						Treasury Stock				Accumulated Other Comprehensive Loss			Shares				Total			Amount					Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Gain (Loss)			Retained Earnings			Total
BALANCE, December 31, 2017	8,899,587		$	100	Additional Paid-In Capital			$	179,241			$	(49,788	)		$	Retained Earnings	(1,764	)	$	28,607			$	156,396
BALANCE, December 31, 2018																								8,904,902		$	102	$	194,116		$	(58,711	)	$	(4,883	)	$	30,525		$	161,149
Net income	—		—		—				—				—				7,978			7,978				—		—		—			—			—			392			392
Other comprehensive income	—		—		—				—				(1,199		)		—			(1,199		)
Other comprehensive gain																								—		—		—			—			831			—			831
Issuance of restricted stock, net of forfeitures	214,389		2		(2		)		—				—				—			—				158,046		2		(2		)	—			—			—			—
Dividends declared	—		—		—				—				—				(6,094		)	(6,094		)
Dividends declared ($0.72 per share)																								—		—		—			—			—			(6,380		)	(6,380		)
Stock based compensation expense	—		—		4,187				—				—				—			4,187				—		—		3,252			—			—			—			3,252
Reclassification of compensation liability to be paid in shares	—		—		165				—				—				—			165				—		—		232			—			—			—			232
Purchases of treasury stock	(13,031	)	—		—				(726		)		—				—			(726		)		(25,047	)	—		—			(981		)	—			—			(981		)
Restricted stock returned for payment of taxes	(83,671	)	—		—				(4,687		)		—				—			(4,687		)		(62,036	)	—		—			(2,385		)	—			—			(2,385		)
BALANCE, March 31, 2018	9,017,274		$	102	$	183,591			$	(55,201	)		$	(2,963	)		$	30,491		$	156,020
BALANCE, March 31, 2019																								8,975,865		$	104	$	197,598		$	(62,077	)	$	(4,052	)	$	24,537		$	156,110



	Common Stock, Par				Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
	Shares		Amount		Additional Paid-In Capital			Treasury Stock			Accumulated Other Comprehensive Loss			Retained Earnings			Total
BALANCE, December 31, 2017	8,899,587		$	100	$	179,241		$	(49,788	)	$	(1,764	)	$	28,607		$	156,396
Net income	—		—		—			—			—			7,978			7,978
Other comprehensive loss	—		—		—			—			(1,199		)	—			(1,199		)
Issuance of restricted stock, net of forfeitures	214,389		2		(2		)	—			—						—
Dividends declared ($0.68 per share)	—		—					—			—			(6,094		)	(6,094		)
Stock based compensation expense	—		—		4,187			—			—			—			4,187
Reclassification of compensation liability to be paid in shares					165									—			165
Purchases of treasury stock	(13,031	)	—		—			(726		)	—			—			(726		)
Restricted stock returned for payment of taxes	(83,671	)	—		—			(4,687		)	—			—			(4,687		)
BALANCE, March 31, 2018	9,017,274		$	102	$	183,591		$	(55,201	)	$	(2,963	)	$	30,491		$	156,020

See Notes to Condensed Consolidated Financial Statements.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Three Months Ended March 31,						Three Months Ended March 31,
	2018			2017			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,978		$	6,064		$	392		$	7,978
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	213			240			212			213
Amortization of intangible assets	418			490			413			418
Unrealized (gains) losses on trading investments	232			(303		)	(374		)	232
Stock based compensation expense	4,187			3,897			3,252			4,187
Deferred income taxes	(859		)	26			273			(859		)
Non-cash lease expense							242			270
Gain on sale of operations	(524		)	—			—			(524		)
Other	—			(7		)
Change in operating assets and liabilities:
Net sales of investments - trading securities	2,175			12,002			16,554			2,175
Accounts receivable	(2,575		)	(1,721		)	2,981			(2,575		)
Other current assets	3,027			(18		)	(886		)	3,027
Accounts payable and accrued liabilities	(22		)	(161		)	(275		)	(22		)
Compensation and benefits payable	(13,712		)	(11,394		)	(12,305		)	(13,712		)
Prepaid income taxes/income taxes payable	871			859
Income taxes payable							379			871
Other liabilities	(57		)	(33		)	(293		)	(327		)
Net cash provided by operating activities	1,352			9,941			10,565			1,352
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(299		)	(150		)	(71		)	(299		)
Proceeds from Omaha divestiture	10,013			—			—			10,013
Purchase of investments							(250		)	—
Net cash provided by (used in) investing activities	9,714			(150		)	(321		)	9,714
CASH FLOWS FROM FINANCING ACTIVITIES:
Purchase of treasury stock under employee stock plans	(726		)	(1,326		)	(981		)	(726		)
Restricted stock returned for payment of taxes	(4,687		)	(5,189		)	(2,385		)	(4,687		)
Cash dividends paid	(7,332		)	(6,564		)	(7,686		)	(7,332		)
Net cash used in financing activities	(12,745		)	(13,079		)	(11,052		)	(12,745		)
Effect of currency rate changes on cash	(1,020		)	235			780			(1,020		)
Net Change in Cash and Cash Equivalents	(2,699		)	(3,053		)	(28		)	(2,699		)
Cash and cash equivalents, beginning of period	54,249			33,679			52,449			54,249
Cash and cash equivalents, end of period	$	51,550		$	30,626		$	52,421		$	51,550

Supplemental cash flow information:
Cash paid during the period for income taxes	$	—		$	828		$	453		$	—
Accrued dividends	$	7,836		$	7,358		$	7,980		$	7,836
Accrued purchase of property and equipment	$	29		$	—		$	425		$	29

See Notes to Condensed Consolidated Financial Statements.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. DESCRIPTION OF THE BUSINESS

Westwood Holdings Group, Inc. (“Westwood”, the “Company”, “we”, “us” or “our”) was incorporated under the laws of the State of Delaware on December 12, 2001. Westwood provides investment management services to institutional investors, private wealth clients and financial intermediaries through its subsidiaries, Westwood Management Corp. and Westwood Advisors, L.L.C. (together “Westwood Management”), Westwood Trust, and Westwood International Advisors Inc. (“Westwood International”). Revenue is largely dependent on the total value and composition of assets under management (“AUM”). Accordingly, fluctuations in financial markets and in the composition of AUM impact revenues and results of operations.

Divestiture of our Omaha Operations

On September 6, 2017, we entered into an agreement to sell the Omaha-based component of our ~~Private~~ Wealth Management business. The sale closed on January 12, 2018. We received proceeds of $10.0 million, net of working capital requirements, and recorded a $524,000 gain on the sale, which is included as “Gain on sale of operations” on our Condensed Consolidated ~~Statement~~Statements of Comprehensive Income. The sale reduced ~~our~~ goodwill and intangible assets but did not have a material impact on our Condensed Consolidated Balance Sheet. The following table presents cash proceeds received and net assets sold (in thousands):



Cash Proceeds	$	10,013
Net assets sold:
Accounts receivable	99
Other current assets	112
Goodwill	7,340
Intangible assets, net	2,170
Property and equipment, net	18
Accounts payable and accrued liabilities	(241		)
Other liabilities	(9		)
Gain on sale of operations	$	524

The component is reported within both our Advisory and Trust segments. The sale did not represent a major strategic shift in our business and did not qualify for discontinued operations reporting.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying Condensed Consolidated Financial Statements are unaudited and are presented in accordance with the requirements for quarterly reports on Form 10-Q and consequently do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The Company’s Condensed Consolidated Financial Statements reflect all adjustments (consisting only of normal recurring adjustments) necessary in the opinion of management to present fairly our interim financial position and results of operations and cash flows for the periods presented. The accompanying Condensed Consolidated Financial Statements are presented in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”).

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The accompanying unaudited Condensed Consolidated Financial Statements should be read in conjunction with our Consolidated Financial Statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC. Operating results for the periods in these ~~condensed consolidated financial statements~~Condensed Consolidated Financial Statements are not necessarily indicative of ~~the~~ results for any future period. The accompanying Condensed Consolidated Financial Statements include the accounts of Westwood and its subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation. In the current year, we created a new expense item on the Condensed Consolidated Statements of Comprehensive Income for “(Gain) loss on foreign currency transactions,” which was previously included in “General and Administrative” expense, and a new cash flow item on the Condensed Consolidated Statements of Cash Flows for Non-cash lease expense, which was previously included in the changes in operating assets and liabilities within “Other liabilities.” Prior year financial statements were reclassified to conform to this presentation. These reclassifications had no impact on net income, stockholders’ equity or cash flows as previously reported.

Recent Accounting Pronouncements

Recently Adopted

In ~~May 2014,~~February 2016, the FASB issued ASU ~~2014-09,~~2016-02, ~~Revenue from Contracts~~Leases. ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases at the commencement date, excluding short-term leases. Leases will be classified as either financing or operating, with ~~Customers (Topic 606), which~~

~~resulted from a joint project by~~classification impacting the ~~FASB and~~pattern of expense recognition in the ~~International Accounting Standards Board to clarify the principles for~~

~~recognizing revenue and to develop a common revenue standard for GAAP and International Financial Reporting Standards~~

~~(“IFRS”).~~income statement. The ~~ASU~~amendment is effective for ~~annual reporting~~fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We adopted the standard as of January 1, 2019 under the modified retrospective approach, which provides a method for recording existing leases at adoption and in comparative periods that approximates the results of a full retrospective approach. We elected the package of practical expedients permitted under the transition guidance, which, among other things, allows us to carry forward the historical lease classification and elect hindsight to determine certain lease terms for existing leases. See further discussion in Note 13 “Leases.”

The following table summarizes the impacts of the adoption of ASU 2016-02 to our previously reported results (in thousands):



Balance Sheet as of December 31, 2018:	As Previously Reported		New Lease Standard Adjustment			As Restated
Operating lease right-of-use assets	$	—	$	8,698		$	8,698
Operating lease liabilities	—		1,432			1,432
Noncurrent operating lease liabilities	—		9,331			9,331
Deferred rent	2,065		(2,065		)	—

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. The purpose of this amendment is to simplify the accounting for share-based payments granted to nonemployees for goods and services by aligning it with the accounting used for arrangements with employees. We adopted the standard as of January 1, 2019 and it did not have a material impact on our Consolidated Financial Statements.

Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework- Changes to the Disclosure Requirements for Fair Value Measurement. The purpose of this amendment is to modify, remove and add certain disclosure requirements for fair value measurements. Under ASU 2018-13, entities are required to disclose the amount of total gains or losses recognized in other comprehensive income attributable to assets and liabilities categorized within Level 3 of the fair value hierarchy. The ASU also adds an incremental requirement about significant unobservable inputs for Level 3 fair value measurements. The requirement to disclose reasons for transfers between Level 1 and Level 2 was removed. Various requirements for Level 3 disclosure were also modified. The amendments in this ASU are effective for all entities for fiscal years and interim periods beginning after December 15, ~~2017, including interim reporting periods~~2019. We do not expect the amendment to have a material impact on our Consolidated Financial Statements, and we plan to adopt this amendment within ~~that reporting period. Retrospective application is~~the required with the entity either applying the change to each prior reporting period presented or applying the cumulative effect of each prior reporting period presented at the date of initial application. We adopted ASU 2014-09 effective January 1, 2018. See further discussion in Note 9 “Revenue.”time frame.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

In ~~March~~August 2018, the FASB issued ASU ~~2018-05,~~2018-15, ~~Income Taxes: Amendments~~Intangibles - Goodwill and Other - Internal-Use Software (Topic 350): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The purpose of this amendment is to ~~SEC Paragraphs Pursuant~~align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to ~~SEC Staff Accounting Bulletin No. 118~~,develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The amendments in this update are effective for public companies for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year. We do not expect the amendment to ~~address~~have a material impact on our Consolidated Financial Statements, and we plan to adopt the ~~application of U.S. GAAP in situations when a registrant does not have~~standard within the necessary information available, prepared or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Cuts and Jobs Act (“Tax Reform Act”). See further discussion in Note 11 “Income Taxes.”required time frame.

3. EARNINGS PER SHARE

Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors. There were approximately ~~10,000~~51,000 and ~~20,000~~10,000 anti-dilutive restricted shares outstanding for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share and share amounts):


	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2019		2018
Net income	$	7,978	$	6,064	$	392	$	7,978

Weighted average shares outstanding - basic	8,270,793		8,065,825		8,363,109		8,270,793
Dilutive potential shares from unvested restricted shares	268,752		245,557		92,277		268,752
Weighted average shares outstanding - diluted	8,539,545		8,311,382		8,455,386		8,539,545

Earnings per share:
Basic	$	0.96	$	0.75	$	0.05	$	0.96
Diluted	$	0.93	$	0.73	$	0.05	$	0.93

4. INVESTMENTS

During 2018, we entered into a $5.4 million strategic investment in an equity position of a private company, which is included in “Investments” on our Condensed Consolidated Balance Sheets. This investment represents a private company without a readily-determinable fair value. The Company has elected to apply the measurement alternative of cost minus impairment, if any, plus or minus changes resulting from observable price changes. As of March 31, 2019 and December 31, 2018, there were no observable price changes or indicators of impairment for this investment.

In February 2019, we made a $250,000 investment in Westwood Hospitality Fund I, LLC, a private investment fund. Our investment is included in “Investments” on our Condensed Consolidated Balance Sheets and will be measured at fair value on a recurring basis using net asset value (“NAV”) as a practical expedient.

All other investments are accounted for as trading securities, are carried at fair value on a recurring basis and are included in “Investments, at fair value” on our Condensed Consolidated Balance Sheets.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

~~4. INVESTMENTS~~

~~All investments are~~Investments carried at fair value ~~and are accounted for as trading securities. Investment balances~~ are presented in the table below (in thousands):


	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value		Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Market Value
March 31, 2018:
March 31, 2019:
U.S. Government and Government agency obligations	$	26,889	$	18	$	—		$	26,907	$	32,386	$	234	$	—		$	32,620
Money market funds	10,329		—		—			10,329		10,511		—		—			10,511
Equity funds	11,288		500		(107		)	11,681		6,424		146		(100		)	6,470
Total trading securities										49,321		380		(100		)	49,601
Private investment fund										250		—		—			250
Total investments carried at fair value										$	49,571	$	380	$	(100	)	$	49,851
	$	48,506	$	518	$	(107	)	$	48,917
December 31, 2017:
December 31, 2018:
U.S. Government and Government agency obligations	$	29,367	$	21	$	(15	)	$	29,373	$	48,177	$	232	$	—		$	48,409
Money market funds	9,736		—		—			9,736		10,354		—		—			10,354
Equity funds	11,578		657		(20		)	12,215		7,344		—		(326		)	7,018
	$	50,681	$	678	$	(35	)	$	51,324
Total trading securities										$	65,875	$	232	$	(326	)	$	65,781

As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, approximately ~~$10.7~~$6.4 million and $6.1 million, respectively, in corporate funds were invested in Westwood Funds®~~, Westwood Common Trust Funds and Westwood Investment Funds PLC (the “UCITS Fund”)~~. See Note 8 “Variable Interest ~~Entities”.~~Entities.”

5. FAIR VALUE MEASUREMENTS

We determine estimated fair values for our financial instruments using available information. The fair value amounts discussed in our Condensed Consolidated Financial Statements are not necessarily indicative of either amounts realizable upon disposition of these instruments or our intent or ability to dispose of these assets. The estimated fair value of cash and cash equivalents, accounts receivable, prepaid income taxes, other current assets, accounts payable and accrued liabilities, dividends payable, compensation and benefits payable and income taxes payable approximates their carrying value due to their short-term maturities. The carrying amount of investments designated as ~~“trading”~~trading securities, primarily U.S. Government and Government agency obligations, money market funds, Westwood Funds® mutual funds, ~~the UCITS Fund~~Westwood Investment Funds Plc (the “UCITS Fund”) and Westwood Trust common trust fund shares, equals their fair value based on prices quoted in active markets and, with respect to common trust funds, the net asset value of the shares held as reported by each fund. Market values of our money market holdings generally do not fluctuate. Our strategic investment in a private company discussed in Note 4 “Investments” is excluded from the recurring fair value table shown below, as we have elected to apply the measurement alternative for this investment.

ASC 820, Fair Value Measurements, defines fair value, establishes a framework for measuring fair value and requires disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows:

level 1 – quoted market prices in active markets for identical assets

level 2 – inputs other than quoted prices that are directly or indirectly observable

level 3 – significant unobservable inputs where there is little or no market activity

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table summarizes the values of our ~~assets and liabilities~~investments measured at fair value on a recurring basis within the fair value hierarchy as of the dates indicated ~~within the fair value hierarchy~~ (in thousands):

Level 1 Level 2 Level 3
Investments Measured at NAV ⁽¹⁾
Total
As of March 31, 2018:
Investments in trading securities $ 46,651
$ —
$ —
$ 2,266
$ 48,917
Total financial instruments $ 46,651
$ —
$ —
$ 2,266
$ 48,917

As of December 31, 2017:
Investments in trading securities $ 48,998
$ —
$ —
$ 2,326
$ 51,324
Total financial instruments $ 48,998
$ —
$ —
$ 2,326
$ 51,324

(1) Comprised of certain investments measured at fair value using net asset value (“NAV”) as a practical expedient. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on our Condensed Consolidated Balance Sheets.



	Level 1		Level 2		Level 3		Investments Measured at NAV ⁽¹⁾		Total
As of March 31, 2019:
Investments in trading securities	$	49,601	$	—	$	—	$	—	$	49,601
Private investment fund	—		—		—		250		250
Total investments carried at fair value	$	49,601	$	—	$	—	$	250	$	49,851

As of December 31, 2018:
Investments in trading securities	$	65,781	$	—	$	—	$	—	$	65,781
Total investments carried at fair value	$	65,781	$	—	$	—	$	—	$	65,781

(1) Comprised of certain investments measured at fair value using NAV as a practical expedient. The fair value amounts presented in this table are intended to permit reconciliation of the fair value hierarchy to the amounts presented on our Condensed Consolidated Balance Sheets.

6. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the cost of acquired assets over the fair value of the underlying identifiable assets at the date of acquisition. Goodwill is not amortized but is tested for impairment at least annually. We completed our annual goodwill impairment assessment during the third quarter of ~~2017~~2018 and determined that no impairment loss was required. No impairments on goodwill were recorded during the three months ended March 31, ~~2018~~2019 or ~~2017.~~

~~Changes in goodwill for the periods presented are as follows (in thousands):~~

Goodwill
Balance as of December 31, 2017 $ 27,144
Reduction from Omaha divestiture (7,340 )
Balance as of March 31, 2018 $ 19,804
2018.

Other Intangible Assets

Our intangible assets represent the acquisition date fair value of acquired client relationships, trade names, non-compete agreements and internally developed software and are reflected net of amortization. In valuing these assets, we made significant estimates regarding their useful lives, growth rates and potential attrition. We periodically review intangible assets for events or circumstances that would indicate impairment. No impairments on intangible assets were recorded during the three months ended March 31, ~~2018~~2019 or ~~2017.~~2018.

~~Changes in the balance~~

7. STOCKHOLDERS' EQUITY

Accumulated Other Comprehensive Loss

The components of ~~intangible assets for the periods presented are~~“Accumulated other comprehensive loss” were as follows (in thousands):

Intangible assets, net
Balance as of December 31, 2017 $ 19,804
Amortization (418 )
Reduction from Omaha divestiture ⁽¹⁾
(2,170 )
Balance as of March 31, 2018 $ 17,216

~~______________________~~

~~(1) Related to client relationships~~



	As of March 31, 2019			As of December 31, 2018
Foreign currency translation adjustment	$	(4,052	)	$	(4,883	)
Accumulated other comprehensive loss	$	(4,052	)	$	(4,883	)

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

~~7. STOCKHOLDERS' EQUITY~~

~~Accumulated Other Comprehensive Loss~~

~~The components of accumulated other comprehensive loss were as follows (in thousands):~~

As of March 31, 2018 As of December 31, 2017
Foreign currency translation adjustment $ (2,963 ) $ (1,764 )
Accumulated other comprehensive loss $ (2,963 ) $ (1,764 )

8. VARIABLE INTEREST ENTITIES

We have evaluated ~~all of~~(i) our advisory relationships with the UCITS Fund and the Westwood Funds® ~~and~~, (ii) our relationship as sponsor of the Common Trust Funds (“CTFs”) and managing member of the private investment funds Westwood Hospitality Fund I, LLC and Westwood Technology Opportunities Fund I, LP (collectively, the “Private Funds”) and (iii) the private company discussed in Note 4 “Investments” (“Private Equity”) to determine whether each of these entities is a variable interest entity (“VIE”) or voting ownership entity (“VOE”). Based on our analysis, we determined that the CTFs and Private Funds were VIEs, as the at-risk equity holders do not have the ability to direct the activities that most significantly impact the entity’s economic performance, and the Company and its representatives have a majority control of the entities' respective boards of directors and can influence the respective entities' management and affairs. Prior to the sale of our Omaha-based operations, we also considered our advisory relationship with ten limited liability companies (“LLCs”) as VIEs, but as of March 31, 2018, we no longer serve as the managing member of the funds and do not control the activities that most significantly impact the entities' economic performance. Therefore, the LLCs are no longer considered a VIE. Although we have related parties on the UCITS Fund board of directors, the shareholders have rights to remove the current directors ~~with~~by a simple majority vote and so we determined that the UCITS Fund is not a VIE. As the Company and its representatives do not have representation on the Westwood Funds® or the Private Equity independent ~~board~~boards of directors, which ~~directs~~direct the activities that most significantly impact the ~~entity's~~entities' economic performance, we determined that the Westwood Funds® and the Private Equity were not VIEs. Therefore, the UCITS Fund, ~~and the~~ Westwood Funds® and Private Equity should be analyzed under the VOE consolidation method. Based on our analysis of our ~~seed~~ investments in these entities for the periods ending March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we have not consolidated the CTFs, Private Funds or LLCs under the VIE method or the UCITS Fund, ~~or the~~ Westwood Funds® or Private Equity under the VOE method, and therefore the financial results of these entities are not included in the Company’s consolidated financial results.

As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, our seed investments aggregated approximately ~~$10.7~~$6.4 million and $6.1 million, respectively, in the ~~CTFs, the~~ Westwood ~~Funds, and the UCITS Fund. These~~Funds. The seed investments were provided for the sole purpose of showing the economic substance needed to establish the ~~funds or sub-funds.~~funds. The Company's seed investments in these funds are included in “Investments, at fair value” on our Condensed Consolidated Balance ~~Sheet at March 31, 2018.~~Sheets.

~~Otherwise, we~~We have not otherwise provided any financial support ~~we were~~ not previously contractually obligated to provide, and there are no arrangements that would require us to provide additional financial support to any of these entities. Our seed investments in the above-mentioned Westwood Funds®, the UCITS Fund and the CTFs are accounted for as investments in accordance with our other investments described in Note 4 “Investments.” We recognized fee revenue from the Westwood VIEs and Westwood VOEs of approximately ~~$12.6~~$8.7 million and ~~$12.8~~$12.6 million for the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, respectively.

The following table displays the assets under management, the amounts of our seed investments included in “Investments” on our consolidated balance sheets, and the risk of loss in each vehicle (in millions):



	As of March 31, 2019
	Assets Under Management		Corporate Investment		Amount at Risk
VIEs/VOEs:
Westwood Funds®	$	3,168	$	6.4	$	6.4
Common Trust Funds	1,687		—		—
UCITS Fund	317		—		—
Private Funds	10		0.3		0.3
Private Equity	—		5.4		5.4
All other assets:
Wealth Management	2,671
Institutional	8,918
Total Assets Under Management	$	16,771

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table displays the assets under management, the amounts of our seed investments that are included in “Investments, at fair value” on our consolidated balance sheets, and the risk of loss in each vehicle (in millions):

As of March 31, 2018
Assets
Under
Management Corporate
Investment Amount at Risk
VIEs/VOEs:
Westwood Funds® $ 4,244
$ 6
$ 6
Common Trust Funds 2,424
2
2
UCITS Fund 405
2
2
All other assets:
Private Wealth 2,577

Institutional 12,972

Total Assets Under Management $ 22,622

9. REVENUE

~~Adoption of ASC 2014-09~~ ~~Revenue from Contracts with Customers (Topic 606)~~

On January 1, 2018, we adopted ASU 2016-10 using the modified retrospective method applied to those contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under Topic 606 while prior period amounts continue to be reported in accordance with our historic accounting under Topic 605.

We analyzed the revenue from prior periods and determined no material adjustments to opening retained earnings were necessary as the updated guidance is consistent with our historical revenue recognition methodology.

Revenue Recognition

Revenues are recognized when the performance obligation (the investment management and advisory or trust services provided to the client) defined by the investment advisory or sub-advisory agreement is satisfied. For each performance obligation, we determine at contract inception whether the revenue satisfies over time or at a point in time. We derive our revenues from investment advisory fees, trust fees and other sources of revenues. Advisory and Trust fees are calculated based on a percentage of assets under management and the performance obligation is realized over the current calendar quarter. Once clients receive our investment advisory services we have an enforceable right to payment.

Advisory Fee Revenues

Our advisory fees are generated by Westwood Management and Westwood International, which manage client accounts under investment advisory and sub-advisory agreements. Advisory fees are typically calculated based on a percentage of assets under management and are paid in accordance with the terms of the agreements. Advisory fees are paid quarterly in advance based on assets under management on the last day of the preceding quarter, quarterly in arrears based on assets under management on the last day of the quarter just ended or are based on a daily or monthly analysis of assets under management for the stated period. We recognize advisory fee revenues as services are rendered. Since our advance paying clients' billing periods coincide with the calendar quarter to which such payments relate, revenue is recognized within the quarter and our condensed consolidated financial statements contain no deferred advisory fee revenues. Advisory clients typically consist of institutional and mutual fund accounts.

~~WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

Institutional investors ~~includes~~include separate accounts of (i) corporate pension and profit sharing plans, public employee retirement funds, Taft Hartley plans, endowments, foundations and individuals; (ii) subadvisory relationships where Westwood provides investment management services for funds offered by other financial institutions; (iii) pooled investment vehicles, including the UCITS Fund and collective investment trusts; and (iv) managed account relationships with brokerage firms and other registered investment advisors that offer Westwood products to their customers.

Mutual funds include the Westwood Funds®, a family of mutual funds for which Westwood Management serves as advisor. These funds are available to individual investors, as well as offered as part of our investment strategies for institutional investors and private wealth accounts.

Arrangements with Performance Based Obligations

A limited number of our advisory clients have a contractual performance-based fee component in their contracts, which generates additional revenues if we outperform a specified index over a specific period of time. The revenue is based on future market performance and is susceptible to factors outside our control. We cannot conclude that ~~it is probable that~~ a significant reversal in the cumulative amount of revenue recognized ~~would~~will not occur during the measurement period, and therefore the revenue is recorded at the end of the measurement period when the performance obligation has been satisfied.

Trust Fee Revenues

Our trust fees are generated by Westwood Trust pursuant to trust or custodial agreements. Trust fees are separately negotiated with each client and are generally based on a percentage of assets under management. Westwood Trust also provides trust services to a small number of clients on a fixed fee basis. The fees for most of our trust clients are calculated quarterly in arrears, based on a daily average of assets under management for the quarter. Since billing periods for most of Westwood Trust’s clients coincide with the calendar quarter, revenue is fully recognized within the quarter and our Condensed Consolidated Financial Statements do not contain a significant amount of deferred trust fee revenues.

~~Revenue Disaggregated~~

~~The following table presents our revenue disaggregated by account type (sales taxes are excluded from revenues):~~

Three Months Ended March 31,
2018 2017
Advisory Fees:
Institutional $ 16,705
$ 16,609
Mutual Funds 7,750
7,180
Private Wealth 28
—
Performance-based 1,335
386
Trust Fees 7,609
7,795
Other 140
653
Total revenues $ 33,567
$ 32,623

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Revenue Disaggregated

Sales taxes are excluded from revenues. The following table presents our revenue disaggregated by account type (in thousands):



	Three Months Ended March 31,
	2019		2018
Advisory Fees:
Institutional	$	10,439	$	16,705
Mutual Funds	5,865		7,750
Wealth Management	102		28
Performance-based	180		1,335
Trust Fees	6,539		7,609
Other	737		140
Total revenues	$	23,862	$	33,567

We have clients in various locations around the world. The following table presents our revenue disaggregated by our clients' geographical ~~locations:~~locations (in thousands):



Three Months Ended March 31, 2019	Advisory		Trust		Performance-based		Other		Total
Asia	$	406	$	—	$	—	$	—	$	406
Australia	591		—		—		—		591
Canada	824		—		—		40		864
Europe	977		—		180		—		1,157
United States	13,608		6,539		—		697		20,844
Total	$	16,406	$	6,539	$	180	$	737	$	23,862



Three Months Ended March 31, 2018	Advisory		Trust		Performance-based		Other		Total
Asia	$	1,431	$	—	$	—	$	—	$	1,431
Australia	1,022		—		—		—		1,022
Canada	1,830		—		—		49		1,879
Europe	1,243		—		—		—		1,243
United States	18,957		7,609		1,335		91		27,992
Total	$	24,483	$	7,609	$	1,335	$	140	$	33,567

Three Months Ended March 31, 2017 Advisory Trust Performance-based Other Total
Asia $ 1,539
$ —
$ —
$ —
$ 1,539
Australia 641
—
—
—
641
Canada 2,015
—
—
83
2,098
Europe 1,057
—
—
—
1,057
United States 18,537
7,795
386
570
27,288
Total $ 23,789
$ 7,795
$ 386
$ 653
$ 32,623

10. LONG-TERM INCENTIVE COMPENSATION

Restricted Stock Awards

We have issued restricted shares to our employees and non-employee directors. The ~~Fourth~~Fifth Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan (the “Plan”) reserves shares of Westwood common stock for issuance to eligible employees, directors and consultants of Westwood or its subsidiaries in the form of restricted stock. The total number of shares issuable under the Plan (including predecessor plans to the Plan) may not exceed ~~4,648,100~~4,848,100 shares. At March 31, ~~2018,~~2019, approximately ~~207,000~~280,000 shares remain available for issuance under the Plan.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table presents the total stock-based compensation expense recorded for stock-based compensation arrangements for the periods indicated (in thousands):


	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2019		2018
Service condition stock-based compensation expense	$	2,790	$	2,629	$	2,188	$	2,790
Performance condition stock-based compensation expense	1,276		1,123		928		1,276
Stock-based compensation expense under the Plan	4,066		3,752		3,116		4,066
Canadian Plan stock-based compensation expense	121		145		136		121
Total stock-based compensation expense	$	4,187	$	3,897	$	3,252	$	4,187

Restricted Stock

Under the Plan, we have granted to employees and non-employee directors restricted stock subject to service conditions and to certain key employees restricted stock subject to both service and performance conditions.

As of March 31, ~~2018,~~2019, there was approximately ~~$30.9~~$22.0 million of unrecognized compensation cost for restricted stock grants under the Plan, which we expect to recognize over a weighted-average period of ~~2.6~~2.8 years. Our two types of restricted stock grants under the Plan are discussed below.

~~WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

Restricted Stock Subject Only to a Service Condition

We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued and an adjustment for restrictions on dividends. This compensation cost is amortized on a straight-line basis over the applicable vesting period, with adjustments for forfeitures recorded as they occur.

The following table details the status and changes in our restricted stock grants subject only to a service condition for the three months ended March 31, ~~2018:~~2019:


	Shares		Weighted Average Grant Date Fair Value		Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2018	519,375		$	55.44
Non-vested, January 1, 2019					440,073		$	56.40
Granted	160,668		55.72		177,416		38.77
Vested	(190,908	)	53.26		(150,589	)	57.03
Forfeited	(14,795	)	56.56		(21,061	)	50.32
Non-vested, March 31, 2018	474,340		$	56.38
Non-vested, March 31, 2019					445,839		$	49.46

Restricted Stock Subject to Service and Performance Conditions

Under the Plan, certain key employees were provided agreements for grants of restricted shares that vest over multiple year periods subject to achieving annual performance goals established by the Compensation Committee of Westwood’s Board of Directors. Each year the Compensation Committee establishes specific goals for that year’s vesting of the restricted shares. The date that the Compensation Committee establishes annual goals is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. The vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the specific performance goals from the Company’s audited consolidated financial statements. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed.

In March 2018, the Compensation Committee established the fiscal 2018 goal for our Chief Executive Officer and Chief Investment Officer as Income before income taxes of $20.0 million for 50% of their respective awards and an Income before income taxes target of $36.0 million (ranging from 25% of target for threshold performance of $32.0 million to 185% of target for maximum performance of $44.5 million) for the remaining 50% of their respective awards. For certain other key employees,2019, the Compensation Committee established fiscal ~~2018~~2019 goals based on various departmental and company-wide performance ~~goals, including Income before income taxes of at least $20.0 million.~~goals. During the first ~~quarter~~three months of ~~2018,~~2019, we recorded expense related to the applicable percentage of the performance-based restricted shares expected to meet or exceed the performance goals needed to earn the shares.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table details the status and changes in our restricted stock grants subject to service and performance conditions for the three months ended March 31, ~~2018:~~2019:

Shares Weighted Average
Grant Date Fair Value
Non-vested, January 1, 2018 165,918
$ 55.85
Granted 84,829
55.46
Vested (98,281 ) 55.81
Forfeited —
—
Non-vested, March 31, 2018 152,466
$ 55.47

~~WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~



	Shares		Weighted Average Grant Date Fair Value
Non-vested, January 1, 2019	156,293		$	55.66
Granted	21,186		37.97
Vested	(80,493	)	56.09
Forfeited	(19,495	)	55.18
Non-vested, March 31, 2019	77,491		$	50.29

Canadian Plan

The Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”) provides compensation in the form of common stock for services performed by employees of Westwood International. Under the Canadian Plan, no more than $10 million CDN ($~~7.8~~7.5 million in U.S. Dollars using the exchange rate on March 31, ~~2018)~~2019) may be funded to the plan trustee for purchases of common stock with respect to awards granted under the Canadian Plan. At March 31, ~~2018,~~2019, approximately ~~$3.4~~$2.3 million CDN ($~~2.7~~1.7 million in U.S. Dollars using the exchange rate on March 31, ~~2018)~~2019) remains available for issuance under the Canadian Plan, or approximately ~~47,340~~48,000 shares based on the closing share price of our stock of ~~$56.49~~$35.27 as of March 31, ~~2018.~~2019. During the first three months of ~~2018,~~2019, the trust formed pursuant to the Canadian Plan purchased in the open market ~~13,031~~25,047 Westwood common shares for approximately ~~$726,000.~~$980,000. As of March 31, ~~2018,~~2019, the trust holds ~~46,358~~61,078 shares of Westwood common stock. As of March 31, ~~2018,~~2019, unrecognized compensation cost related to restricted stock grants under the Canadian Plan totaled ~~$1.1~~$1.3 million, which we expect to recognize over a weighted-average period of ~~2.1~~2.2 years.

Mutual Fund Share Incentive Awards

We grant annually to certain employees mutual fund incentive awards, which are bonus awards based on our mutual funds achieving specific performance goals. Awards granted are notionally credited to a participant account maintained by us that contains a number of mutual fund shares equal to the award amount divided by the net closing value of a fund share on the date the amount is credited to the account. We maintain the award in a corporate investment account until vesting. The investment may increase or decrease based on changes in the value of the mutual fund shares awarded, including reinvested income from the mutual funds during the vesting period. Unvested mutual fund awards are included under “Investments, at fair value” on our Condensed Consolidated Balance Sheets.

Awards vest ~~after~~over approximately two years of service following the year in which the participant earned the award. We begin accruing a liability for mutual fund incentive awards when we believe it is probable that the award will be earned and record expense for these awards over the service period of the award, which is three years. During the year in which the amount of the award is determined, we record expense based on the expected value of the award. After the award is earned, we record expense based on the value of the shares awarded and the percentage of the vesting period that has elapsed. Our liability under these awards may increase or decrease based on changes in the value of the mutual fund shares awarded, including reinvested income from the mutual funds during the vesting period. Upon vesting, participants receive the value of the mutual fund share awards adjusted for earnings or losses attributable to the underlying mutual funds. For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, we recorded expense of approximately ~~$174,000~~$8,000 and ~~$288,000,~~$174,000, respectively, related to mutual fund share incentive awards. During the first quarter of 2019, we also recorded a $134,000 credit to mutual fund expense related to the forfeiture of a mutual fund award. As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we had an accrued liability of approximately ~~$507,000~~$42,000 and ~~$1.8 million,~~$635,000, respectively, related to mutual fund share incentive awards.

~~11. INCOME TAXES~~

Our effective income tax rate was 23.9% for the first quarter of 2018, compared with 22.0% for the first quarter of 2017. The current quarter rate benefited from the decrease in the U.S. corporate income tax rate under the Tax Reform Act signed into law in December 2017, while the first quarter of 2017 included a $1.0 million tax benefit related to the adoption of ASU 2016-09 ~~Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Excluding this discrete tax benefit, our effective tax rate would have been 34.2% for the prior year quarter.~~

~~Tax Reform Act~~

On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Reform Act. During 2017, we provisionally recognized the incremental tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in our Consolidated Financial Statements for the year ended December 31, 2017. During the first quarter of 2018, we did not make any changes to the amounts provisionally recognized. The ultimate impact may differ, possibly materially, from these provisional amounts due to, among other things, additional analysis, changes in interpretations and assumptions we have made, additional regulatory guidance that may be issued and actions we may take as a result of the Tax Reform Act. The accounting is expected to be complete when our 2017 U.S. corporate income tax return is filed in the third quarter of 2018.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

11. INCOME TAXES

Our effective income tax rate was 73.8% for the first quarter of 2019, compared with 23.9% for the first quarter of 2018. The current quarter rate was negatively impacted by a $638,000 discrete tax expense related to a permanent difference between book and tax restricted stock expense based on a decrease in our stock price between the grant and vesting dates.

Tax Audit

The Company is subject to taxation in the United States and various state and foreign jurisdictions. Our 2015, 2016 and 2017 tax returns are currently under audit in a state jurisdiction in which we operate. It is reasonably possible that the audits may be completed during the next twelve months, and we do not expect the result of the audits to have a material impact on our Consolidated Financial Statements.

12. RELATED PARTY TRANSACTIONS

Some of our directors, executive officers and their affiliates invest ~~their~~ personal funds directly in trust accounts that we manage. For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, we recorded trust fees from these accounts of ~~$95,000~~$78,000 and $95,000, respectively. There was ~~$95,000~~$78,000 and ~~$98,000~~$84,000 due from these accounts as of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, respectively.

The Company engages in transactions with its affiliates in the ordinary course of business. Westwood International and Westwood Management provide investment advisory services to the ~~UCITS Fund and the~~ Westwood Funds®., and Westwood International provides investment advisory services to the UCITS Fund. Certain members of our management serve on the board of directors of the UCITS Fund, and we have capital invested in three of the Westwood Funds®. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the fund or by the funds directly. The fees are based on negotiated fee schedules applied to assets under management. These fees are commensurate with market rates. For the three months ended March 31, ~~2018~~2019 and ~~2017,~~2018, the Company earned approximately $820,000 and $1.2 million, ~~and $800,000,~~ respectively, in fees from the affiliated funds. These fees do not include fees paid directly to Westwood International by certain clients invested in the UCITS Fund that have an investment management agreement with Westwood International. As of March 31, ~~2018~~2019 and December 31, ~~2017, $427,000~~2018, $311,000 and ~~$423,000,~~$295,000, respectively, of these fees were ~~unpaid~~outstanding and included in “Accounts receivable” on our Condensed Consolidated Balance Sheets.

~~13. COMMITMENTS AND CONTINGENCIES~~

~~On August 3, 2012, AGF Management Limited~~As discussed in Note 4 “Investments,” the Company made a strategic investment in an equity position of a private company during 2018. We previously entered into a separate agreement with this private company to implement portfolio management and AGF Investments Inc. (collectively, “AGF”) filed a lawsuit in the Ontario Superior Court of Justice against Westwood, certain Westwood employees and the executive recruiting firm of Warren International, LLC (“Warren”). The action related to the hiring of certain members of Westwood’s global and emerging markets investment team previously employed by AGF. On November 5, 2012, Westwood responded to AGF’s lawsuit with a counterclaim, and on November 6, 2012, AGF filed a second lawsuit against Westwood, Westwood Management and an employee of Westwood International.

On October 13, 2017, we reached a settlement with AGF that provides for the dismissal of all claims, with prejudice and without any admission of liability. We agreed to pay AGF a one-time payment of $10.0 million CDN, half of which was covered by our insurance. During 2017, we recorded a net $4.0 million ($5.0 million CDN) charge related to the settlement and associated insurance coverage, with a $4.0 million ($5.0 million CDN) receivable from our insurance provider included in “Other current assets” on our Condensed Consolidated Balance Sheets at December 31, 2017. Of that amount, we received insurance proceeds of $3.6 million duringdigital solutions products. For the three months ended March 31, ~~2018. At March 31,~~2019 and 2018, we ~~had a receivable related~~incurred approximately $132,000 and $75,000, respectively, in expenses payable to ~~the settlement of approximately $403,000~~this company, which are included in ~~“Other current assets”~~“Information technology expenses” on our Condensed Consolidated ~~Balance Sheets.~~Statements of Comprehensive Income.

~~Our policy is to not accrue legal fees and directly related costs as part of potential loss contingencies.~~

13. LEASES

We have ~~agreed with~~operating leases for corporate offices and for certain office equipment. The lease terms for our ~~Directors & Officers insurance provider that 50%~~corporate offices vary and have remaining lease terms ranging from 1 to 7 years. The corporate office lease payments are fixed and are based upon contractual monthly rates. The majority of our corporate office leases do not include options to extend or terminate the ~~defense costs related to both AGF claims, excluding Westwood’s counterclaim against AGF, are covered by insurance.~~leases, and each lease is re-negotiated before its leasing period ends. We ~~expense legal fees and directly related costs as incurred. We had~~lease office equipment for a ~~receivable~~period of approximately $237,000 and $212,000 as of March 31, 2018 and December 31, 2017, which represents our current minimum estimate of expenses that we expect to recover under our insurance policy. This receivable is part of “Other current assets” on our Condensed Consolidated Balance Sheets.2 years.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

The following table presents the components of lease costs, as well as supplemental cash flow information, related to our leases (in thousands):



	Three Months Ended March 31,
	2019		2018
Operating lease cost	$	471	$	436
Supplemental cash flow information:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	521	$	474
Right-of-use assets obtained in exchange for lease obligations	$	—	$	254

Operating lease cost is included in “General and administrative” expense on our Condensed Consolidated Statements of Comprehensive Income.

The following table presents information regarding our operating leases (in thousands, except years and rates):



	March 31, 2019			December 31, 2018
Operating lease right-of-use assets	$	8,472		$	8,698
Operating lease liabilities	$	1,538		$	1,432
Non-current lease liabilities	$	8,949		$	9,331
Total lease liabilities	$	10,487		$	10,763
Weighted-average remaining lease term - (in years)	6.4			6.6
Weighted-average discount rate	5.0		%	5.0		%

The maturities of lease liabilities are as follows (in thousands):



Year Ending December 31,	Operating Leases
2019 (excluding the three months ended March 31, 2019)	$	1,572
2020	2,119
2021	2,083
2022	1,717
2023	1,719
2024	1,550
Thereafter	1,852
Total undiscounted lease payments	$	12,612
Less discount	(2,125		)
Total lease liabilities	$	10,487

14. SEGMENT REPORTING

We operate two segments: Advisory and Trust. These segments are managed separately based on the types of products and services offered and their related client bases. The Company’s segment information is prepared on the same basis that management reviews the financial information for operational decision-making purposes. The Company’s chief operating decision maker, our Chief Executive Officer, evaluates the performance of our segments based primarily on fee revenues and Economic Earnings. Westwood Holdings Group, Inc., the parent company of Advisory and Trust, does not have revenues and is the entity in which we record typical holding company expenses including employee compensation and benefits for holding company employees, directors’ fees and investor relations costs. All segment accounting policies are the same as those described in the summary of significant accounting policies. Intersegment balances that eliminate in consolidation have been applied to the appropriate segment.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

Advisory

Our Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, the Westwood Funds®, and the UCITS Fund, as well as investment subadvisory services to mutual funds and our Trust segment. Westwood Management ~~Corp.~~ and Westwood International, which provide investment advisory services to ~~clients of~~ similar ~~type,~~clients, are included in our Advisory ~~segment along with Westwood Advisors, L.L.C.~~segment.

Trust

Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Trust is included in our Trust segment.

~~WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~



(in thousands)	Advisory			Trust			Westwood Holdings			Eliminations			Consolidated
Three Months Ended March 31, 2019
Net fee revenues from external sources	$	16,586		$	6,539		$	—		$	—		$	23,125
Net intersegment revenues	1,016			71			—			(1,087		)	—
Net interest and dividend revenue	225			86			—			—			311
Other, net	432			(6		)	—			—			426
Total revenues	$	18,259		$	6,690		$	—		$	(1,087	)	$	23,862
Economic Earnings	$	4,880		$	1,253		$	(2,017	)	$	—		$	4,116
Less: Restricted stock expense													3,252
Intangible amortization													413
Deferred taxes on goodwill													59
Net income													$	392

Segment assets	$	226,362		$	62,696		$	19,746		$	(127,655	)	$	181,149
Segment goodwill	$	3,403		$	16,401		$	—		$	—		$	19,804

Three Months Ended March 31, 2018
Net fee revenues from external sources	$	25,818		$	7,609		$	—		$	—		$	33,427
Net intersegment revenues	2,037			55			—			(2,092		)	—
Net interest and dividend revenue	141			46			—			—			187
Other, net	(43		)	(4		)	—			—			(47		)
Total revenues	$	27,953		$	7,706		$	—		$	(2,092	)	$	33,567
Economic Earnings	$	13,800		$	1,220		$	(2,378	)	$	—		$	12,642
Less: Restricted stock expense													4,187
Intangible amortization													418
Deferred taxes on goodwill													59
Net income													$	7,978

Segment assets	$	204,343		$	60,584		$	18,132		$	(107,943	)	$	175,116
Segment goodwill	$	3,403		$	16,401		$	—		$	—		$	19,804

(in thousands) Advisory Trust Westwood
Holdings Eliminations Consolidated
Three Months Ended March 31, 2018
Net fee revenues from external sources $ 25,818
$ 7,609
$ —
$ —
$ 33,427
Net intersegment revenues 2,037
55
—
(2,092 ) —
Net interest and dividend revenue 141
46
—
—
187
Other, net (43 ) (4 ) —
—
(47 )
Total revenues $ 27,953
$ 7,706
$ —
$ (2,092 ) $ 33,567
Economic Earnings $ 13,800
$ 1,220
$ (2,378 ) $ —
$ 12,642
Less: Restricted stock expense 4,187
Intangible amortization 418
Deferred taxes on goodwill 59
Net income $ 7,978

Segment assets $ 204,343
$ 60,584
$ 18,132
$ (107,943 ) $ 175,116
Segment goodwill $ 3,403
$ 16,401
$ —
$ —
$ 19,804

Three Months Ended March 31, 2017
Net fee revenues from external sources $ 24,175
$ 7,795
$ —
$ —
$ 31,970
Net intersegment revenues 2,026
51
—
(2,077 ) —
Net interest and dividend revenue 158
9
—
—
167
Other, net 482
4
—
—
486
Total revenues $ 26,841
$ 7,859
$ —
$ (2,077 ) $ 32,623
Economic Earnings $ 10,787
$ 1,448
$ (1,628 ) $ —
$ 10,607
Less: Restricted stock expense 3,897
Intangible amortization 490
Deferred taxes on goodwill 156
Net income $ 6,064

Segment assets $ 178,591
$ 66,166
$ 9,744
$ (88,397 ) $ 166,104
Segment goodwill $ 5,219
$ 21,925
$ —
$ —
$ 27,144

We are providing a performance measure that we refer to as Economic Earnings. Our management and the Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and determine our dividend policy. We also believe that this performance measure is useful for management and investors when evaluating our underlying operating and financial performance and our available resources.

WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(Unaudited)

In calculating Economic Earnings, we add to net income the non-cash expense associated with equity-based compensation awards of restricted stock, amortization of intangible assets and the deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipment is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement.

~~WESTWOOD HOLDINGS GROUP, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~(Unaudited)~~

The following tables provide a reconciliation of Net income to Economic Earnings (in thousands):


	Three Months Ended March 31,				Three Months Ended March 31,
	2018		2017		2019		2018
Net income	$	7,978	$	6,064	$	392	$	7,978
Add: Stock-based compensation expense	4,187		3,897		3,252		4,187
Add: Intangible amortization	418		490		413		418
Add: Tax benefit from goodwill amortization	59		156		59		59
Economic Earnings	$	12,642	$	10,607	$	4,116	$	12,642

15. SUBSEQUENT EVENTS

Dividend Declared

In April ~~2018,~~2019, Westwood’s Board of Directors declared a quarterly cash dividend of ~~$0.68~~$0.72 per common share, payable on July ~~2, 2018,~~1, 2019, to stockholders of record on June ~~8, 2018.~~7, 2019.


ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements

Statements in this report and the Annual Report to Stockholders that are not purely historical facts, including, without limitation, statements about our expected future financial position, results of operations or cash flows, as well as other statements including, without limitation, words such as “anticipate,” “believe,” “plan,” “estimate,” “expect,” “intend,” “should,” “could,” “goal,” “may,” “target,” “designed,” “on track,” “comfortable with,” “optimistic” and other similar expressions, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Actual results and the timing of some events could differ materially from those projected in or contemplated by the forward-looking statements due to a number of factors, including, without limitation, the risks described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC, and those risks set forth below:

the composition and market value of our assets under management;

regulations adversely affecting the financial services industry;

competition in the investment management industry;

our assets under management includes investments in foreign companies;

our ability to develop and market new investment strategies successfully;

our reputation and our relationships with current and potential customers;

our ability to attract and retain qualified personnel;

our ability to ~~perform operational tasks;~~maintain effective cyber security;

our ability to ~~maintain effective cyber security;~~perform operational tasks;

our ability to identify and execute on our strategic initiatives;

our ability to maintain effective information systems;

our ability to select and oversee third-party vendors;

~~our ability to maintain effective information systems;~~

litigation risks;

our ability to properly address conflicts of interest;

our ability to maintain adequate insurance coverage;

our ability to maintain an effective system of internal controls;

our ability to maintain our fee structure in light of competitive fee pressures;

our relationships with investment consulting firms; and

the significant concentration of our revenues in a small number of customers.

You should not unduly rely on these forward-looking statements, which speak only as of the date of this report. We are not obligated and do not undertake an obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances occurring after the date of this report or to reflect the occurrence of unanticipated events or otherwise.

Overview

We manage investment assets and provide services for our clients through our subsidiaries, Westwood Management Corp. and Westwood Advisors, L.L.C. (each of which is an SEC-registered investment advisor and referred to hereinafter together as “Westwood Management”), Westwood International Advisors Inc. (“Westwood International”) and Westwood Trust. Westwood Management provides investment advisory services to institutional investors, a family of mutual funds called the Westwood Funds®, other mutual funds, an ~~Ireland-domiciled fund organized~~Irish investment company authorized pursuant to the European ~~Union’s Undertakings~~Communities (Undertakings for Collective Investment in Transferable ~~Securities~~Securities) Regulation 2011 (as amended) (the “UCITS Fund”), ~~individual investors~~individuals and clients of Westwood Trust. Westwood International provides investment advisory services to institutional clients, the Westwood Funds®, other mutual funds, the UCITS Fund and clients of Westwood Trust. Westwood Trust provides trust and custodial services and participation in ~~self-sponsored~~ common trust funds to institutions and high net worth individuals. Our revenues are generally derived from fees based on a percentage of assets under management.

Divestiture of our Omaha Operations

On September 6, 2017, we entered into an agreement to sell the Omaha-based component of our ~~Private~~ Wealth Management business. The sale closed on January 12, 2018. We received proceeds of $10.0 million, net of working capital requirements, and recorded a gain ~~of $524,000~~ on the sale of $524,000, which is included as “Gain on sale of operations” on our Consolidated Statement of Comprehensive Income. The component is reported within both our Advisory and Trust segments. The sale did not represent a major strategic shift in our business and did not qualify for discontinued operations reporting.

Revenues

We derive our revenues from investment advisory fees, trust fees and other revenues. Our advisory fees are generated by Westwood Management and Westwood International, which manage client accounts under investment advisory and subadvisory agreements. Advisory fees are typically calculated based on a percentage of assets under management and are paid in accordance with the terms of the agreements. Advisory fees are paid quarterly in advance based on assets under management on the last day of the preceding quarter, quarterly in arrears based on assets under management on the last day of the quarter just ended or are based on a daily or monthly analysis of assets under management for the stated period. We recognize advisory fee revenues as services are rendered. A limited number of our clients have a contractual performance-based fee component in their contracts, which generates additional revenues if we outperform a specified index over a specific period of time. We record revenues from performance-based fees at the end of the measurement period. Since our advance paying clients' billing periods coincide with the calendar quarter to which such payments relate, revenue is recognized within the quarter, and our Condensed Consolidated Financial Statements contain no deferred advisory fee revenues.

Our trust fees are generated by Westwood Trust pursuant to trust or custodial agreements. Trust fees are separately negotiated with each client and are generally based on a percentage of assets under management. Westwood Trust also provides trust services to a small number of clients on a fixed fee basis. Trust fees ~~for most of our trust clients~~ are primarily either calculated quarterly in arrears based on a daily average of assets under management for the quarter. Since billing periods for most of Westwood Trust’s clients coincide with the calendar quarter or monthly based on the month-end assets under management. Since billing periods for most of Westwood Trust's clients coincide with the calendar quarter, revenue is fully recognized within the quarter, and our Condensed Consolidated Financial Statements do not contain a significant amount of deferred trust fee revenues.

Our other revenues generally consist of interest and investment income. Although we generally invest most of our cash in U.S. Treasury securities, we also invest in equity and fixed income instruments and money market funds, including seed money for new investment strategies.

Employee Compensation and Benefits

Employee compensation and benefits expenses generally consist of salaries, incentive compensation, equity-based compensation and benefits.

Sales and Marketing

Sales and marketing expenses relate to our marketing efforts, including travel and entertainment, direct marketing and advertising costs.

Westwood Mutual Funds

Westwood Mutual Funds expenses relate to our marketing, distribution and administration of the Westwood Funds®.

Information Technology

Information technology expenses are generally costs associated with proprietary investment research tools, maintenance and support, computing hardware, software licenses, telecommunications and other related costs.

Professional Services

Professional services expenses generally consist of costs associated with subadvisory fees, audit, tax, legal and other professional services.

General and Administrative

General and administrative expenses generally consist of costs associated with the lease of our office space, amortization, depreciation, insurance, custody expense, Board of ~~Directors~~Directors' fees, investor relations, licenses and fees, office supplies ~~foreign currency transaction gains/losses~~ and other miscellaneous expenses.

Gain (Loss) on Foreign Currency Transactions

Gain (loss) on foreign currency transactions consists of foreign currency transactions primarily related to Westwood International Advisors.

Gain on Sale of Operations

Gain on sale of operations includes the gain on the sale of our Omaha-based component of our ~~Private~~ Wealth Management business.

Assets Under Management

Assets under management (“AUM”) ~~increased $500 million~~decreased $5.8 billion to $16.8 billion at March 31, 2019 compared with $22.6 billion at March 31, ~~2018 compared with $22.1 billion at March 31, 2017.~~2018. The average of beginning and ending assets under management for the first quarter of ~~2018~~2019 was ~~$23.4~~$16.7 billion compared to ~~$21.7~~$23.4 billion for the first quarter of ~~2017.~~2018. These ~~increases~~decreases are due to market appreciation over the last twelve months and $713 million in a long-only convertibles fund that transitioned from assets under advisement (“AUA”) to AUM during the third quarter of 2017, partially offset by net outflows, including ~~$850~~$629 million of outflows related to the sale of the Omaha-based component of our ~~Private~~ Wealth ~~business.~~Management business, partially offset by market appreciation, over the last twelve months.

The following table displays assets under management as of March 31, ~~2018~~2019 and ~~2017:~~2018:


					% Change						% Change
					March 31, 2018						March 31, 2019
	As of March 31,				vs.		As of March 31,				vs.
	2018		2017		March 31, 2017		2019		2018		March 31, 2018
	(in millions)						(in millions)
Institutional(1)	$	13,377	$	12,435	8	%	$	9,235	$	13,377	(31	)%
Private Wealth	5,001		5,675		(12	)
Wealth Management⁽²⁾							4,368		5,001		(13	)
Mutual Funds(3)	4,244		3,963		7		3,168		4,244		(25	)
Total Assets Under Management⁽¹⁾⁽⁴⁾	$	22,622	$	22,073	2	%	$	16,771	$	22,622	(26	)%

________________

(1)

Institutional includes (i) separate accounts of corporate pension and profit sharing plans, public employee retirement funds, Taft-Hartley plans, endowments, foundations and individuals; (ii) subadvisory relationships where Westwood provides investment management services for funds offered by other financial institutions; (iii) pooled investment vehicles, including the UCITS Fund and collective investment trusts; and (iv) managed account relationships with brokerage firms and other registered investment advisors that offer Westwood products to their customers.

(2)

Wealth Management includes assets for which Westwood Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals pursuant to trust or agency agreements and assets for which Westwood Advisors, L.L.C. provided advisory services to high net worth individuals. Investment subadvisory services are provided for the common trust funds by Westwood Management, Westwood International Advisors and external unaffiliated subadvisors. For certain assets in this category Westwood Trust currently provides limited custody services for a minimal or no fee, viewing these assets as potentially converting to fee-generating managed assets in the future. As an example, some assets in this category consist of low-basis stock currently held in custody for clients where we believe such assets may convert to fee-generating managed assets following an intergenerational transfer of wealth.


(3)	Mutual Funds include the Westwood Funds®, a family of mutual funds for which Westwood Management serves as advisor. These funds are available to individual investors, as well as offered as part of our investment strategies for institutional and private wealth accounts.

(4)

AUM excludes $264 million and $250 million of assets under advisement (“AUA”) as of March 31, 2019 and 2018, respectively, related to our model portfolios for which we provided consulting advice but for which we did not have direct discretionary investment authority. AUM excluded approximately $1.1 billion of AUA as of March 31, 2017 related to model portfolios, including approximately $723 million in a long-only convertibles fund for which we provided consulting advice but for which we did not have direct discretionary investment authority. The long-only convertibles fund transitioned to AUM during the third quarter of 2017.

~~Institutional~~ includes (i) separate accounts of corporate pension and profit sharing plans, public employee retirement funds, Taft Hartley plans, endowments, foundations and individuals; (ii) subadvisory relationships where Westwood provides investment management services for funds offered by other financial institutions; (iii) pooled investment vehicles, including the UCITS Fund and collective investment trusts; and (iv) managed account relationships with brokerage firms and other registered investment advisors that offer Westwood products to their customers.

~~Private Wealth~~ includes assets for which Westwood Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals pursuant to trust or custodial agreements and assets for which Westwood Advisors, L.L.C. provides advisory services to high net worth individuals. Investment subadvisory services are provided for the common trust funds by Westwood Management, Westwood International and external, unaffiliated subadvisors. For certain assets in this category, Westwood Trust currently provides limited custody services for a minimal or no fee, viewing these assets as potentially converting to fee-generating managed assets in the future. As an example, some assets in this category consist of low-basis stock currently held in custody for clients where we believe such assets may convert to fee-generating managed assets upon an inter-generational transfer of wealth.

~~Mutual Funds~~ ~~include the Westwood Funds~~®, a family of mutual funds for which Westwood Management serves as advisor. These funds are available to individual investors, as well as offered as part of our investment strategies for institutional and private wealth accounts.

Roll-Forward of Assets Under Management


	Three Months Ended March 31,						Three Months Ended March 31,
(in millions)	2018			2017			2019			2018
Institutional
Beginning of period assets	$	14,421		$	11,911		$	9,327		$	14,421
Inflows	393			370			254			393
Outflows	(1,389		)	(607		)	(1,202		)	(1,389		)
Net flows	(996		)	(237		)	(948		)	(996		)
Market appreciation	(48		)	761
Market appreciation (depreciation)							856			(48		)
Net change	(1,044		)	524			(92		)	(1,044		)
End of period assets	$	13,377		$	12,435		$	9,235		$	13,377

Private Wealth
Wealth Management
Beginning of period assets	$	5,566		$	5,520		$	4,043		$	5,566
Inflows	65			194			101			65
Outflows⁽¹⁾	(584		)	(245		)	(117		)	(584		)
Net flows	(519		)	(51		)	(16		)	(519		)
Market appreciation	(46		)	206
Market appreciation (depreciation)							341			(46		)
Net change	(565		)	155			325			(565		)
End of period assets	$	5,001		$	5,675		$	4,368		$	5,001

Mutual Funds
Beginning of period assets	$	4,242		$	3,810		$	3,236		$	4,242
Inflows	343			242			165			343
Outflows	(285		)	(249		)	(526		)	(285		)
Net flows	58			(7		)	(361		)	58
Market appreciation	(56		)	160
Market appreciation (depreciation)							293			(56		)
Net change	2			153			(68		)	2
End of period assets	$	4,244		$	3,963		$	3,168		$	4,244

Total AUM
Beginning of period assets	$	24,229		$	21,241		$	16,606		$	24,229
Inflows	801			806			520			801
Outflows	(2,258		)	(1,101		)	(1,845		)	(2,258		)
Net flows	(1,457		)	(295		)	(1,325		)	(1,457		)
Market appreciation	(150		)	1,127
Market appreciation (depreciation)							1,490			(150		)
Net change	(1,607		)	832			165			(1,607		)
End of period assets	$	22,622		$	22,073		$	16,771		$	22,622

________________


(1)	~~Private~~ Wealth Management outflows include approximately $453 million of assets related to the sale of the Omaha-based component of our ~~Private~~ Wealth ~~business.~~Management business for the three months ended March 31, 2018.

Three months ended March 31, ~~2018~~2019 and ~~2017~~2018

The $165 million increase in assets under management for the three months ended March 31, 2019 was due to market appreciation of $1.5 billion, offset by net outflows of $1.3 billion. Net outflows were primarily related to our Emerging Markets and Income Opportunity strategies, partially offset by net inflows to our SmallCap Value strategy.

The $1.6 billion decrease in assets under management for the three months ended March 31, 2018 was due to market depreciation of $150 million and net outflows of $1.5 billion. Net outflows were primarily related to our Emerging Markets and LargeCap Value strategies and ~~outflows related to~~ the divestiture of our Omaha operations, ~~partially offset by net inflows to our SmallCap strategy.~~

The $832 million increase in assets under management for the three months ended March 31, 2017 was due to market appreciation of $1.1 billion, partially offset by net outflows of $295 million. Net outflows were primarily related to our SMidCap strategies and LargeCap Value strategy, partially offset by net inflows to our SmallCap Value ~~Market Neutral Income, and Emerging Markets strategies.~~strategy.

Results of Operations

The following table (dollars in thousands) and discussion of our results of operations are based upon data derived from the condensed consolidated statements of comprehensive income contained in our condensed consolidated financial statements and should be read in conjunction with those statements included elsewhere in this report.


					% Change
					Three Months Ended							% Change
	Three Months Ended				March 31, 2018		Three Months Ended					March 31, 2019
	March 31,				vs.		March 31,					vs.
	2018		2017		March 31, 2017		2019		2018			March 31, 2018
Revenues:
Advisory fees: asset-based	$	24,483	$	23,789	3	%	$	16,406	$	24,483		(33	)%
Advisory fees: performance-based	1,335		386		246		180		1,335			(87	)
Trust fees	7,609		7,795		(2	)	6,539		7,609			(14	)
Other revenues	140		653		NM		737		140			NM
Total revenues	33,567		32,623		3		23,862		33,567			(29	)
Expenses:
Employee compensation and benefits	17,759		17,717		—		14,610		17,759			(18	)
Sales and marketing	443		477		(7	)	530		443			20
Westwood mutual funds	985		863		14		846		985			(14	)
Information technology	2,038		1,756		16		1,977		2,038			(3	)
Professional services	1,028		1,496		(31	)	1,149		1,028			12
General and administrative	1,351		2,544		(47	)	2,434		2,414			1
(Gain) loss on foreign currency transactions							820		(1,063		)	NM
Total expenses	23,604		24,853		(5	)	22,366		23,604			(5	)
Net operating income	9,963		7,770		28		1,496		9,963			(85	)
Gain on sale of operations	524		—		NM		—		524			NM
Income before income taxes	10,487		7,770		35		1,496		10,487			(86	)
Provision for income taxes	2,509		1,706		47		1,104		2,509			(56	)
Net income	$	7,978	$	6,064	32	%	$	392	$	7,978		(95	)%

_________________________

NM Not meaningful

Three months ended March 31, ~~2018~~2019 compared to three months ended March 31, ~~2017~~2018

Total Revenues. ~~Our~~ Total revenues ~~increased $1.0~~decreased $9.7 million, or 3%29%, to $23.9 million for the three months ended March 31, 2019 compared with $33.6 million for the three months ended March 31, ~~2018 compared with $32.6~~2018. Asset-based advisory fees decreased $8.1 million, or 33%, and Trust fees decreased $1.1 million, or 14%, both primarily due to lower average assets under management. Performance-based fees decreased $1.1 million, or 86.5%, to $0.2 million for the three months ended March 31, 2017. Asset-based advisory fees increased $0.7 million, or 3%, primarily due to higher average assets under management. Trust fees decreased $0.2 million, or 2%, primarily due to the sale of the Omaha-based component of our Private Wealth business. Performance-based advisory fees increased by $0.9 million.

~~Professional Services. Professional services costs decreased $0.5 million or 31.3%, to $1.0~~2019 compared with $1.3 million for the three months ended March 31, ~~2018~~2018.

Employee Compensation and Benefits. Employee compensation and benefits decreased$3.2 million, or 18%, to $14.6 million for the three months ended March 31, 2019 compared with ~~$1.5~~$17.8 million for the three months ended March 31, ~~2017 primarily~~2018. The decrease was due to reductions in compensation relating to short- and long-term incentive compensation as a ~~decrease in consulting services and external advisory services for our trust operations.~~result of lower asset-based revenues as compared to the prior year quarter.

~~General and Administrative~~. General and administrative costs decreased $1.1 million, or 46.9%, to $1.4 million for the three months ended March 31, 2018 compared with $2.5 million for the three months ended March 31, 2017 primarily due to a $1.1 million(Gain) loss on foreign currency ~~transaction gain~~transactions. We recorded$820,000 foreign currency losses in the ~~first~~current quarter ~~of 2018~~ as a result of a ~~3% increase~~2.2% decrease in the Canadian dollar exchange rate.

~~Gain on Sale of Operations.~~ ~~The three months ended March 31, 2018 includes a $0.5 million gain on the sale of our Omaha-based component of our Private Wealth business.~~

Provision for Income Taxes. The effective tax rate increased to 73.8% for the three months ended March 31, 2019 from 23.9% for the three months ended March 31, ~~2018 from 22.0% for the three months ended March 31, 2017.~~2018. The current quarter rate ~~benefited from the~~was negatively impacted by a $638,000 discrete tax expense related to a permanent difference between book and tax restricted stock expense based on a decrease in our stock price between the ~~U.S. corporate income tax rate under the Tax Cuts~~grant and ~~Jobs Act signed into law in December 2017. The first quarter of 2017 included a $1.0 million tax benefit related to the adoption of ASU 2016-09~~ ~~Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting. Excluding this discrete tax benefit, our effective tax rate would have been 34.2% for the prior year quarter.~~vesting dates.

Supplemental Financial Information

As supplemental information, we provide a non-U.S. generally accepted accounting principles (“non-GAAP”) performance measure that we refer to as Economic Earnings. We provide this measure in addition to, but not as a substitute for, net income reported on a U.S. generally accepted accounting principles (“GAAP”) basis. Our management and Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and review the dividend policy. We believe that this non-GAAP performance measure, while not a substitute for GAAP net income, is useful for management and investors when evaluating our underlying operating and financial performance and our available resources. We do not advocate that investors consider this non-GAAP measure without also considering financial information prepared in accordance with GAAP.

In calculating Economic Earnings, we add back to net income the non-cash expense associated with equity-based compensation awards of restricted stock, amortization of intangible assets and deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipment is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement.

The following tables provide a reconciliation of Net income to Economic Earnings (in thousands, except share and per share amounts):


	Three Months Ended March 31,				% Change		Three Months Ended March 31,				% Change
	2018		2017		% Change		2019		2018		% Change
Net income	$	7,978	$	6,064	32	%	$	392	$	7,978	(95	)%
Add: Stock-based compensation expense	4,187		3,897		7		3,252		4,187		(22	)
Add: Intangible amortization	418		490		(15	)	413		418		(1	)
Add: Tax benefit from goodwill amortization	59		156		(62	)	59		59		—
Economic Earnings	$	12,642	$	10,607	19	%	$	4,116	$	12,642	(67	)%
Diluted weighted average shares outstanding	8,539,545		8,311,382				8,455,386		8,539,545
Economic Earnings per share	$	1.48	$	1.28			$	0.49	$	1.48

Liquidity and Capital Resources

We fund our operations and cash requirements with cash generated from operating activities. We may also use cash from operations to pay dividends to our stockholders. As of March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, we had no debt. The changes in net cash provided by operating activities generally reflect the changes in earnings plus the effects of non-cash items and changes in working ~~capital.~~capital, including liquidation of investments used to cover current liabilities. Changes in working capital, especially accounts receivable and accounts payable, are generally the result of timing differences between collection of fees billed and payment of operating expenses.

During the three months ended March 31, ~~2018,~~2019, cash flow provided by operating activities ~~principally our investment advisory business,~~ was ~~$1.4 million.~~$10.6 million, which included $16.5 million liquidation of current investments partially offset by a $12.3 million decrease in compensation and benefits payables. Cash flow ~~provided by~~used in investing activities of ~~$9.7 million~~$321,000 during the three months ended March 31, ~~2018~~2019 was primarily related to our investment in a private investment fund, while the prior year quarter experienced cash flow provided by investing activities as a result of the sale of the Omaha-based component of our ~~private~~ wealth management business. Cash flow used in financing activities of ~~$12.7~~$11.1 million for the three months ended March 31, ~~2018 was due to~~2019 reflected the payment of dividends, purchases of restricted stock returned for payment of taxes and purchases of treasury shares for our Canadian share award plan.

We had cash and short-term investments of ~~$100.5~~$102.0 million as of March 31, ~~2018~~2019 and ~~$105.6~~$118.2 million as of December 31, ~~2017.~~2018. Cash and cash equivalents as of March 31, ~~2018~~2019 and December 31, ~~2017 includes~~2018 included approximately ~~$36~~$33.0 million ~~and $33 million, respectively,~~ of undistributed income from Westwood International. In accordance with the one-time mandatory deemed repatriation required under tax legislation signed into law in December 2017, we have accrued a $1.8 million income tax liability related to this undistributed income. If these funds were needed for our U.S. operations, we would be required to accrue and pay a 5% incremental Canadian withholding taxes to repatriate all or a portion of these funds. Our current ~~intent~~intention is to permanently reinvest the funds subject to withholding taxes outside of the U.S., and our current forecasts do not demonstrate a need to repatriate them to fund our U.S. operations. At March 31, ~~2018~~2019 and December 31, ~~2017,~~2018, working capital aggregated ~~$113.3~~$106.7 million and ~~$106.6~~$112.6 million, respectively.

Westwood Trust must maintain cash and investments in an amount equal to the minimum restricted capital of $4.0 million, as required by the Texas Finance Code. Restricted capital is included in Investments in the accompanying Condensed Consolidated Balance Sheets. At March 31, ~~2018,~~2019, Westwood Trust had approximately ~~$15.4~~$17.3 million in excess of its minimum capital requirement.

Our future liquidity and capital requirements will depend upon numerous factors, including our results of operations, the timing and magnitude of capital expenditures or strategic initiatives, our dividend policy and other business and risk factors described under “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, filed with the SEC. We believe that current cash and short-term investment balances ~~and~~plus cash generated from operations will be sufficient to meet both the operating and capital requirements of our ordinary business operations through at least the next twelve months. However, there can be no assurance that we will not require additional financing within this time frame. The failure to raise needed capital on attractive terms, if at all, could have a material adverse effect on our business, financial condition and results of operations.

Contractual Obligations

As of March 31, ~~2018,~~2019, there have been no material changes outside of the ordinary course of business to our contractual obligations since December 31, ~~2017.~~2018. For information regarding our contractual obligations, refer to “Contractual Obligations” in Part II, Item 7. ~~“Management’s~~“Management's Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017.~~2018.

Critical and Significant Accounting Policies and Estimates

Effective January 1, ~~2018,~~2019, we adopted ASU ~~2014-09,~~2016-02, ~~Revenue from Contracts with Customers (Topic 606).~~Leases. Refer to Note ~~9 “Revenue”~~2 “Summary of Significant Accounting Policies” and Note 13 “Leases” in our Condensed Consolidated Financial Statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for a detailed description of the adoption of ASU ~~2014-09.~~2016-02.

~~Otherwise there~~There have been no other significant changes in our critical or significant accounting policies and estimates since December 31, ~~2017.~~2018. Information with respect to our critical accounting policies and estimates that we believe could have the most significant effect on our reported consolidated results and require difficult, subjective or complex judgment by management ~~are~~is described under “Critical Accounting Policies and Estimates” in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017.~~2018.

Accounting Developments

Refer to Note 2 “Summary of Significant Accounting Policies” in our Condensed Consolidated Financial Statements included in Part I, Item 1. “Financial Statements” of this Quarterly Report on Form 10-Q for a description of recently issued accounting guidance.


ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our Quantitative and Qualitative Disclosures about Market Risk from those previously reported in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.


ITEM 4.	CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (2) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosure. An evaluation was performed under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our management, including our Chief Executive Officer and our Chief Financial Officer, concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

~~For~~During the quarter ended March 31, ~~2018, there~~2019, we implemented the necessary internal controls to ensure we adequately evaluate our contracts for the identification of leases and properly assess the discount rates used to value leases under Accounting Standards Update 2016-02, Leases. There were no other changes in our internal controls over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION


ITEM 1.	LEGAL PROCEEDINGS

None.


ITEM 1A.	RISK FACTORS

We face a number of significant risks and uncertainties in our business, including those detailed under “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2017~~2018 and summarized in this report under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” These risks and uncertainties may affect our current position and future prospects and should be considered carefully in evaluating us, including making an investment in our common stock.


ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table displays information with respect to the treasury shares we purchased during the three months ended March 31, ~~2018:~~2019:


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1)		Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs		Maximum number (or approximate dollar value) of shares that may yet be purchased under the plans or programs (1)
Repurchase program ⁽¹⁾	—	$	—	—		$	9,366,000	—	$	—	—		$	5,366,000
Canadian Plan ⁽²⁾	13,031	$	55.68	—	CDN	$	3,448,000	—	$	—	—	CDN	$	2,259,000
Employee transactions ⁽³⁾								—	$	—	—		—
February 1-28, 2018	59,575	$	55.96	—		—
March 1-31, 2018	24,096	$	55.46	—		—
Feb 1-28, 2019								43,855	$	39.06	—		—
March 1-31, 2019								18,181	$	39.96	—		—

(1)

On July 20, 2012, our Board of Directors authorized management to repurchase up to $10.0 million of our outstanding common stock on the open market or in privately negotiated transactions. In July 2016, Westwood's Board of Directors authorized an additional $5.0 million of repurchases under the share repurchase program. The share repurchase program has no expiration date and may be discontinued at any time by the Board of Directors.

(2)

On April 18, 2013, our stockholders approved the Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”), which contemplates a trustee purchasing up to $10.0 million CDN of our outstanding common stock on the open market for the purpose of making share awards to our Canadian employees. The Canadian Plan has no expiration date and may be discontinued at any time by the Board of Directors.


(3)	Consists of shares of common stock tendered by an employee at the market close price on the date of vesting in order to satisfy the employee’s minimum tax withholding obligations from vested restricted shares. We anticipate having additional shares tendered in subsequent periods for the same purpose.


ITEM 6.	EXHIBITS



~~10.1~~		~~Severance Agreement, dated February 9, 2018, between the company and Fabian Gomez (incorporated by reference from the Form 8-K filed with the SEC on February 13, 2018)~~

31.1*		Certification of Chief Executive Officer Pursuant to Securities Exchange Act Rule 13a-14(a)

31.2*		Certification of Chief Financial Officer Pursuant to Securities Exchange Act Rule 13a-14(a)

32.1**		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		XBRL Instance Document

101.SCH*		XBRL Taxonomy Extension Schema Document

101.CAL*		XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		XBRL Taxonomy Extension Presentation Linkbase Document


*	Filed herewith.


**	Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



Dated:	April ~~25, 2018~~24, 2019	WESTWOOD HOLDINGS GROUP, INC.

		By:	/s/ Brian O. Casey
			Brian O. Casey
			President and Chief Executive Officer

		By:	/s/ ~~Tiffany B. Kice~~Murray Forbes III
			~~Tiffany B. Kice~~Murray Forbes III
			Chief Financial Officer and Treasurer



	Goodwill
Balance as of December 31, 2017	$	27,144
Reduction from Omaha divestiture	(7,340		)
Balance as of March 31, 2018	$	19,804



	As of March 31, 2018			As of December 31, 2017
Foreign currency translation adjustment	$	(2,963	)	$	(1,764	)
Accumulated other comprehensive loss	$	(2,963	)	$	(1,764	)



Three Months Ended March 31, 2017	Advisory		Trust		Performance-based		Other		Total
Asia	$	1,539	$	—	$	—	$	—	$	1,539
Australia	641		—		—		—		641
Canada	2,015		—		—		83		2,098
Europe	1,057		—		—		—		1,057
United States	18,537		7,795		386		570		27,288
Total	$	23,789	$	7,795	$	386	$	653	$	32,623